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07 September 2009

Financial Services Inquiry report

This report from the Equality and Human Rights Commission focuses specifically on gender pay gaps within the Finance Sector. Its scope extends from regional high-street banks to investment houses in and around the City of London, and in terms of jobs, from high-street bank cashiers to investment bankers. The Inquiry was initiated in early 2009, largely because it was already known that the financial services sector has a bigger overall pay gap than any other part of the economy. The Commission found that women working full-time in the finance sector earn 55% less per year than men working full-time. The gap between male and female full-time earnings is twice as large as the average gap across the economy as a whole.

The inquiry took a detailed look into the pay, policies and practices of 44 organisations employing the equivalent to 22.6% of the workforce in the sector. This has revealed that bonuses are a significant factor behind the gender pay gap within the organisations with men receiving five times the performance pay of women, an average of £14,554 in annual performance related pay compared to the female average of £2,875 (based on full-time equivalent earnings). Significantly, the Inquiry found that no improvements appear to have been made. Responses to the questionnaire showed that women in new jobs were still on average receiving lower salaries than men. The high proportion of workers in the 25-39 age group - the age at which employees tend to have children - also makes it harder for women to have a viable career in the sector that balances family life.

The report sheds light on some of the reasons why the financial sector has such a wide pay gap:

In many firms, employees do not know how much their colleagues are paid, and this lack of transparency allows inequalities to grow.

In some roles, bonuses often form a significant element of take-home pay, and sometimes appear to be based more on an individual’s readiness to ask for more than rewards based just on their performance.